In the Long Run,the Imposition of Average-Cost Pricing in Natural

question 58

Multiple Choice

In the long run,the imposition of average-cost pricing in natural monopolies,such as Manitoba Hydro and New Brunswick Power,would generally lead to

• A)allocative efficiency.
• B)productive efficiency.
• C)distorted investment decisions.
• D)a reduction in the output by these firms.
• E)both allocative efficiency and productive efficiency.

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Definitions:

Clearing Times

The period it takes for funds to be transferred from one account to another and become available for use.

Payments

The transfer of money or goods from one part to another as a settlement of an obligation or purchase.

Weighted Average Delay

A measure of the average time delay experienced, factoring in the varying weights of each delay's impact.

Collection Delay

The time it takes for a company to receive payment from its customers for invoices issued.